Part I A. Present Value with Discount rate of 7% = 15000/(1+7%) = 15000/1.07 = $14‚018.69 Present Value with Discount rate of 4% = 15000/(1+4%) = 15000/1.04 = $14‚423.08 B. Account A - Present Value with Discount rate of 6% = 6500/(1+6%) = 6500/1.06 = $6‚132.08 Account B - Present Value with Discount rate of 6% = 12600/(1+6%)^2 = 12600/1.1236 = $11‚213.96 C. Present Value of Gold Mine 7% = 4900000/1.07 + 61‚000‚000/(1.07)^2 + 85‚000‚000/(1.07)^3 = 45‚794‚392.52 + 61‚000‚000/1.1449 + 85
Premium Net present value Cash flow Internal rate of return
1 Value Creation and Enhancement: Back to the Future Aswath Damodaran Stern School of Business 44 West Fourth Street New York‚ NY 10012 adamodar@stern.nyu.edu 1 2 Abstract In recent years‚ firms have turned to their attention increasingly to ways in which they can increase their value. A number of competing measures‚ each with claims to being the "best" approach to value creation‚ have been developed and marketed by investment banking firms and consulting firms. In this paper‚ we begin
Premium Net present value Cash flow Internal rate of return
the inputs into 1) the net initial investment outlay at year 0‚ the initial investment $200‚000 which include taxes and delivery‚ and the cost to install the equipment $12‚500. The total net cost $212‚500. 2) The depreciation tax savings in each year of the projects economic life‚ this will show how much the tax savings will be depreciated each year using the MACRS method 3) the projects incremental cash flows? This shows the company profit for each of the eight years. Net Cost MACRS Tax Rate
Premium Net present value Investment Capital budgeting
Hertz purchases the fleet from GM for $325‚000‚ and Hertz is able to issue $200‚000 of five year‚ 8% debt in order to finance the project. All principal will be repaid in one balloon payment at the end of the fifth year. What is the Adjusted Present Value (APV) of the project? 17.1 a. The maximum price that Hertz should be willing to pay for the fleet of cars with all-equity funding is the price that makes the NPV of the transaction equal to zero. NPV = -Purchase Price + PV[(1- TC )(Earnings
Premium Depreciation Finance Net present value
Time Value of Money” focused on the financial principles used to evaluate and determine whether to outsource manufacturing or to invest in in-house operations. The simulation depicted real-life examples of how investment choices impacts the Net present value (NPV)‚ internal rate of return (IRR)‚ and cost of capital. The objective of the simulation was to apply time value of money principles to evaluate the investment alternatives of Cracker Pop. In each of the simulation’s scenarios‚ net present
Premium Net present value Investment Finance
545 - = Net Realizable Value 538 532 1 Beg. allowance $20 + Bad debt expense $5 – Write-offs ? = End. Allowance $13 Write-offs = $12 2 Beg. accounts receivable $558 + Sales $5‚710 – Write-offs $12 – Collections ? = End. accounts receivable $532 Collections = $5‚711 Req. 3 2006 2007 2008 Net Income 510 497 $(312) ÷ Net Sales 4‚700 5‚695 $5‚710 = Net Profit Margin 10.85% 8.73% (5.46)% The company’s net profit margin has fallen each year while net sales have risen‚ with a net loss reported
Premium Generally Accepted Accounting Principles Revenue
Question 1: What is the value of Harbin Brewery? In order to know the value of Harbin Brewery we will use three different methods of calculation in order to have good and accurate economic valuation of the company which will be used to compare 1) First the market value of a company which can be calculated by multiplying the number of shares per its prices of share. This method relies on direct market valuation of the company which is listed on the stock-exchange: 1000 million shares * 3.20 HK$
Premium Discounted cash flow Weighted average cost of capital Asset
Shariah Based Islami Banking in the year July 2004. On 25th August‚ 2011‚ Mr. Md. Fariduddin Ahmed has joined in the bank as Managing Director. With his long banking experience‚ EXIM Bank become fully compliant Bank with adequate capital and good asset quality. After retirement from Managing Director‚ he has been continuing his service for EXIM Bank as Advisor since 27th July 2012. Dr. Mohammed Haider Ali Miah succeeded Mr. Fariduddin Ahmed on July 25‚ 2012 and has created a new dimension in EXIM
Premium Bank Net asset value Financial services
to estimate the terminal value. Finally‚ regarding the valuation of non-operating investments in equity affiliates‚ due to limited data‚ market multiple approach would be better to use. 2 – Valuation of AirThread Regarding the estimation of the long-term growth rate‚ Ms. Zhang knows that the long-term growth rate would be a function of the company’s return on capital (ROC) and reinvestment rate. According to the definition given in the case‚ ROC is defined as net operating profits after
Premium Free cash flow Debt Interest
differences in asset values and future depreciation that results in deferred tax for the full difference between the said values. The current world economy is characterized by very high volatility among currencies‚ which is significant even during such a short time as one calendar quarter. It is common for the deferred taxes that result from this functional currency issue to have a significant effect on the P&L in both directions in several subsequent quarters. I believe that such an effect on the net results
Premium Tax Balance sheet Investment